Retrenchment Package Calculator South Africa
Enter the salary, service and leave figures and get the full BCEA minimum package, with the working shown against each section of the Act. Built for employers who have to get this number right the first time.
Retrenchment Package Calculator
The full BCEA calculation for one employee or the whole schedule: severance (Section 41), notice pay (Section 37) and leave payout (Section 21), including regular allowances and the 13-week average for commission and overtime earners. Add as many employees as you need, then email yourself the Excel-ready schedule.
How it works
Enter the pay details
Basic salary, regular monthly allowances, and the last 13 weeks of commission or regular overtime if pay varies. The tool builds the legal "week’s remuneration" from these.
Add service and leave
Completed years drive severance, total service drives the notice band, and untaken leave days drive the Section 21 payout. Each line shows its own working.
Use the result properly
Copy the itemised calculation for your records or your accountant, request the SARS tax directive before paying, and issue the UI-19 with reason code 5.
Frequently Asked Questions
How is a retrenchment package calculated in South Africa?
The statutory minimum is severance pay of one week’s remuneration per completed year of continuous service (BCEA Section 41), plus notice pay if notice is paid out instead of worked (Section 37: 1 week under 6 months’ service, 2 weeks from 6 to 12 months, 4 weeks over a year), plus a payout of all accrued untaken annual leave (Section 21). Remuneration includes regular allowances, and commission or regular overtime is averaged over the preceding 13 weeks.
Is severance pay one week or one month per year of service?
The legal minimum is one week per completed year, not one month. A collective agreement, sectoral determination or the employment contract can set a higher figure, and many voluntary retrenchment packages do. If nothing sets a higher amount, one week per completed year is the number the CCMA will test against.
Is severance pay based on basic salary or full remuneration?
Full remuneration, not basic salary. The Ministerial Determination under BCEA Section 35(5) includes regular payments such as a housing allowance, fixed travel or car allowances and cash medical contributions. Using basic salary only is the single most common employer underpayment mistake, and the CCMA orders the shortfall to be paid with interest.
Is a retrenchment package tax free in South Africa?
Partly. The severance portion is taxed on the SARS retirement and severance lump-sum table: the first R550,000 of such benefits over your lifetime is tax-free (2025/26 table), applied through a SARS tax directive the employer must request before paying. Leave payouts and notice pay never qualify; they are ordinary income taxed under PAYE.
How do you calculate severance for a commission earner?
Use the 13-week average: total commission (and regular overtime) earned over the 13 weeks before the termination date, divided by 13, added to the weekly equivalent of the fixed salary and allowances. That combined weekly figure is one "week’s remuneration" for the Section 41 calculation.
Can an employee lose the right to severance pay?
Yes, in one situation: if the employee unreasonably refuses an offer of alternative employment with the same or another employer, Section 41(4) removes the entitlement to severance pay. Notice pay and the leave payout are still owed, because those are separate rights.
Never calculate this under pressure again
Synthro keeps salary history, leave balances and service dates on the employee record, so a retrenchment package takes one look-up instead of an afternoon of spreadsheets. Book a demo and see the termination workflow end to end.